Equipment leasing is when businesses decide to hire equipment for a period of time rather than purchase them outright. Using this approach, a business will sign a lease agreement with a lessor which defines among other things, how the equipment will be used as well as the time duration. It is estimated that about 70% of businesses in the United States lease some or all of their equipment. When it comes to leasing equipment, businesses also have access to equipment lease financing. This makes it easier to access equipment lease financing while maintaining healthy cash flow. Here are some reasons why many companies find it worthwhile to pursue equipment lease financing.
When you get equipment lease financing, it helps your business conserve whatever capital that you have. In these turbulent times of COVID-19, it makes a lot of sense to maintain as much cash reserves as possible. When you get financing to lease your equipment, it means that you still get to undertake your activities without having to worry about having negative cash flow. Healthy cash flow in turn allows your business to take advantage of any opportunities that may arise.
No Replacement Costs
With equipment lease financing, a business is able to replace equipment that has grown obsolete without affecting their cash flow. Equipment manufacturers are always upgrading their equipment every year or so. What this means is that if you purchase your equipment (or use your own cash to renew equipment lease agreements), you would quickly run into cash flow problems. With equipment lease financing, you can afford to stay ahead of the technology curve while at the same time ensuring healthy cash flow.
When you lease equipment, you typically agree to pay the equipment lease financier a fixed amount of money every month or every quarter. This fixed amount will not change throughout the lease period unless the lease financier and the lessee decide to alter the agreement. The advantage here is that you can predict your costs more easily. The ability to predict costs ensures that you can easily manage your cash flow.
When you get financing for your leased equipment, you are able to make changes to your strategy more easily. A good example is a business owner who is not sure if a certain line of products will work. He or she may opt to take equipment lease financing in order to try out the products. After the lease period, the business owner can return the equipment without having affected his capital reserves. This is because the lease finance repayments can be treated as an operational expense, thus ensuring that his capital reserves are intact.
There are numerous advantages to taking equipment lease financing. If you are looking for great equipment leasing and financing terms, CMS Funding is your best bet thanks to minimal red tape and flexible terms.